Wednesday, October 2, 2013

Impact of ban on import : Gold exports drop by a massive 80% in 2mth of FY14

By Abrar Hamza (source: www.dailytimes.com.pk)

KARACHI: The export of jewellery declined
tremendously by 79.72 percent to $59,188 in the first two months of the
current fiscal year 2013-14 (FY14) as against the export $32,932 in the
parallel period of last fiscal year primarily due to ban on import of
gold.

However, the precious stones exports jumped by 18 percent
in the first two months of FY14 to $659,000 or 2.0 tonnes as compared to
the value of $560,000 or 1.0 tonne in the same period of FY13,
according to the latest figures released by Pakistan Bureau of
Statistics (PBS) on Thursday.

The industry experts attributed
this hefty decline to temporarily one month ban on the import of gold
imposed by the new government on July 30, 2013 aimed to save its foreign
currency reserves and to curtail the rampant smuggling going on in the
nation.

Though the government has removed the ban on imports of
gold recently, but the curb had translated into a robust drop in exports
of jewelry as in this sector the export and import are directly
connected with each other since the export of gold ornaments or
jewellery is realised by repatriating gold pieces.

All Pakistan
Jewellers and Manufacturers Welfare Association’s Chairman Muhammad
Arshad while talking to Daily Times said, “The bizarre decision of the
government had bode adversely for the sector as numbers of export orders
have been cancelled or delayed and numerous craftsmen have become
jobless due to that. When the gold sector of the country is already
crawling due to immense hike in precious metal prices for last couple of
years such decisions are unhelpful for the sector.

He was of the
view that the decision had proved fruitless as it did not serve its
purpose to stop depreciation of the rupee against the dollar, although
ban on import has been hoisted but it will take three to four months to
revitalise the gold export like before, he added.

The government
of Pakistan, following the Indian government’s decision to discourage
gold import by imposing 8.0 percent duties had imposed ban for one month
on import of gold.

It is worth mentioning here that during the
last FY13, the export of only jewellery was $4.57 million. The industry
players also rejected the revised scheme for import of gold saying
stakeholders should have consulted before implementing the new scheme.

On
yearly basis the jewellery exports fell by 69 percent to $43,154 in the
month of August 2013 as compared to previous August’s exports of
$139,678. However, realisation of preceding orders supported the exports
of gold during August 2013 as it witnessed exorbitant increase of 169
percent when compared to the export value of $16,034 in the month of
July 2013.

According to the new scheme, no more than 50 percent
of export proceeds will be realised in the form of gold. Resultantly at
least 50 percent will need to be repatriated in foreign exchange through
normal banking channels.

Some other salient features of the new
scheme are; the quantity of gold importable by a single party will be
capped at 25kg on revolving basis, a beneficiary is obligated to export
the imported gold in the form of value-added gold jewellery within 120
days, it will now be mandatory to have a contract notarised from the
foreign country’s legal authorities and then the same would also need to
be duly attested by the relevant Pakistan missions abroad and random
testing of jewellery export consignments will be done at airports to
ensure that they are fully in conformity with the declaration made to
the customs.